Pump.fun, a Solana-based platform for token issuance, has been operating under a straightforward model where all revenue generated was used to purchase and burn its native token, PUMP. Theoretically, this continuous reduction in supply was intended to support the token's price and align its value with the platform's success. However, after reviewing the outcomes of this nine-month, 100% buyback policy, the company has decided to adopt a new approach.
In a recent announcement, Pump.fun revealed that it would be transitioning to a 50/50 revenue split. Under this new model, half of the net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract designed to automatically buy and burn PUMP tokens on the open market for the next year. The remaining half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions.
This shift comes after Pump.fun burned approximately 36% of PUMP's circulating supply, which it had acquired through buybacks over the past nine months, in two significant transactions on the Solana network. The burn process involves the permanent removal of tokens from circulation, typically by transferring them to a wallet address that is not controlled by anyone. This recent burn announcement represents one of the largest single-event supply reductions in the history of cryptocurrency, in terms of the percentage of circulating tokens affected. Alon Cohen, co-founder of Pump.fun, explained the rationale behind this strategic change in a follow-up post, emphasizing the need for the company to utilize half of its revenue for investments in product development, talent acquisition, marketing, and strategic acquisitions to ensure the long-term viability of Pump.fun.
A key factor influencing this decision is the performance of PUMP's price chart. Despite dedicating 100% of its revenue to token buybacks for nine months and achieving over $1 billion in lifetime revenue, PUMP has primarily traded sideways below its initial valuation throughout 2026.
Cohen noted that this moment marks a significant turning point for both $PUMP and Pump.fun, providing an opportunity to reassess the bigger picture and the platform's future trajectory. Over the past nine months, the platform's unique approach of allocating 100% of revenue to buybacks has been unparalleled in the crypto space. However, the bear case for this strategy suggests that the volume of memecoin launchpads is cyclical and prone to mean reversion.
According to data from DefiLlama, Pump.fun's gross protocol revenue was $971.37 million in 2025 but is expected to annualize to approximately $320 million in 2026. This decline in revenue means that the 50% allocated to burns will result in smaller token burns compared to the 100% of peak revenue previously dedicated to this purpose. On the other hand, the bull case focuses on the mathematics of the remaining tokens in circulation. The burn of 36% of the circulating PUMP supply removes a substantial block of tokens that could have otherwise been sold on the market.
Moreover, by locking 50% of future revenue into additional burns, more tokens will be permanently destroyed every week, regardless of future decisions made by the team. If Pump.fun continues to generate even half of the revenue it did in 2025, the ongoing burns could retire a significant portion of the remaining tokens over the next 12 months. This reduction in supply, combined with steady demand, could create a bullish scenario for the token that it may not have seen since its launch.
Following the announcement, PUMP experienced a 6.9% increase in value over 24 hours. With annualized fees of $802 million and revenue of $416 million, as per DefiLlama, Pump.fun is among the rare crypto projects that generate substantial cash flows at scale.